Refinancing a mortgage loan is a fairly commonplace practice. But have you considered refinancing your auto loan? With vehicle prices on the rise, auto and truck loans are a bigger part of many Americans' monthly budget than ever before. This means you may be able to make a big, positive change in a variety of ways if you opt to refinance it. But when is a good time to do that? Here are a few indicators to look for.
1. You Have Equity.
In order to refinance a secured loan, such as a mortgage or vehicle, the asset needs to be worth the same or a little more than you want to borrow. This can be a tricky proposition with a vehicle since they may depreciate faster at certain times. If yours is currently in that sweet spot, it's a good time to explore loan shopping.
2. The Car's Relatively New.
Depreciation in a vehicle also creates another sweet spot for refinancers: its age. Vehicles lose the largest percentage of their value in the first years of a loan, making your equity higher as they age. However, many auto lenders prefer to finance relatively recent models. So, unlike a home loan, you may want to refinance sooner rather than later.
3. Your Credit Is Improved.
Did you have to take out a loan on less favorable terms because of bruised credit? If so, keep an eye on your credit score over time. If you can improve it enough to qualify for better rates and a more agreeable term, you'll save a lot over the life of the auto.
4. The Market Has Changed.
Along with your personal financial circumstances, keep an eye on the general economy. Market interest rates go up and down in response to various world events, and you may be able to take advantage of positive changes. Even if your credit or finances haven't changed, you might still benefit from refinancing.
5. You Can Remove Co-Borrowers.
Did you ask someone to co-sign for you on the original loan? Did you need a second borrower to make it work? If your finances have changed and you might qualify on your own, consider refinancing to remove them. Removing money problems from your personal relationships can make the situation more comfortable.
Want to know more about refinancing a vehicle? No matter which of these factors applies to you, the best place to start is by talking with an auto loan provider in your state today. No matter what you choose, you'll make a great, informed decision that leads to a financially secure future.
To find out more, contact a company like Premier Financial Credit Union.